I would be pleased to read sincere opinions re the merits of moving toward a convertables fund such as FCVSX in times such as these (i.e., where there is some fear of recession, dollar value uncertainty, decreasing interest rates, generally down and definitely volatile stocks). In particular, does FCVSX provide some mitigation of downside risk for someone willing to scarifice some potential gains?
I posted that original question almost a year ago. At that time, I had concerns that equities had peaked and were headed for a decline. So I traded most of my long-held (in IRA) Fidelity Fund (FFIDX) for FCVSX. Well, I was right about equities but wrong about what to do; FCVSX has declined more than FFIDX. Go figure.
I used to really like FCVSX, and had the same thoughts on convertible securities, but lately, it just does not hold up as well as other funds like NIGIX or CICVX, so I am thinking of staying with the same theme but switching funds, anyone else have other good suggestion?
Convertibles have been hit hard, and in some cases even more than equities in the recent market turmoil. Read some recent commentary from Convertible fund managers. Along with high yield debt, convertibles were sold off by hedge funds and fund managers who have been forced to deleverege due to fund redemptions and margin calls. Fundamentals had nothing to do with much of the selling in Convertibles.
Right now there are some very good high yielding convertibles, that are from good companies that are not in danger of default or BK.
I've got 30% of my IRA in FCVSX, and 25% in VWEHX, because I think high yield bonds and convertibles will recover better than equities in 2009 as the economy begins to recover, and the Fed unleashes more liquidity into the economy.
Wow, down a full 3% on a day the Dow is up over 100. Just how much WaMu did they own? And I thought this would be a nice income producer and less volatile than pure stocks. 30% down in a few months stinks. No safe harbor, even money market funds have had a scare.
Thank God it's a weekend, at least I won't see how much I'm losing daily.
Yeah, this one has been tough to watch. Although in retrospect what should I have expected with 45% in energy and financials. As of this writing I'm down 25.21% on this thing. So true that this whole market is catching a falling knife. The sectors should come back. Question is when. I'm just holding out for that dividend that pays me enough for maybe the commisssion to sell this thing. I suspect I'll hold it. If I'm drunk next time I'm checking the portfolio I might even dump another stack into it for the upswing.
Go to "Basic Chart" then check the three indexes - Dow, Nasdaq and S&P. FCVSX doesn't seem to behave like a hedge, which it's supposed to, but it's done better than the three standard indexes! Hold but diversify... It's instinct to dump stocks in a bear market but you gotta hold to be a winner.